Chatime Case Study Analysis
Task: Based on the provided Chatime case study, answer the following questions:
- What is the strategic objective of Chatime? What sorts of issues does this kind of strategic objective pose?
- In the beverages industry, identify what you believe is the viable strategic benefit of Chatime.
- In respect of the market, what are Chatime's obstacles in executing its growth strategy?
- Based on their current situation, what operational attributes does Chatime need to establish in order to achieve its strategic goal?
Chatime Case Study
The headquarters of Taiwanese company Chatime intends the organisation to become the Starbucks of the tea industry. Regional master businessman Charley Zhao would be delighted to imitate Boost juice's accomplishments, but branding and marketing experts will find it difficult to digest the challenge ahead. You know, in efforts to acquire the Asian-Australian market, especially those of Chinese descent, Zhao picked up steam with Chatime. He has concentrated on areas with a large Asian population for this reason. His campaign concentrated on Mandarin-speaking press and Chinese celebrity's concert's funding. And he was approaching franchisors from Asia. ' Naturally, if we were to approach mainstream at the start, then targeting of Asians will be much easier. That's the method we utilized the plan, "he states.
The approach has been found successful in terms of early, easy victories. After the launch of the first Chatime outlet in September 2009 in Hurtsville’s , Sydney (47.5% Asians, according to the 2011 Census), there are now 43 stores across the nation. The retailer in 2011-12 turned over $8.5 million. So Zhao now wishes to establish more stores. His target is 50 outlets by the end of the year, but he has to migrate out of predominantly Asian neighbourhoods inhabited by immigrant families of the first and second-generation and also international students.
Zhao is optimistic that the tea franchise will be accepted by a mainstream population, but his franchisees are not so positive. Many of his 29 franchise owners are eager to set up a new store, but hesitant to open in suburbs, such as Cronulla or a traditional Chinese regional town. To convince them that other regions might be helpful, we shall do all the research, however... They might not be convinced that local popular markets are going to cherish this beverage,' he states. The major issue is that Zhao has carried a specific route to market and although there is no denying about his drive, perseverance and willingness to make it successful, he may have positioned his enterprise in an Asian lump from which it will be difficult to spring up.
Australia has a diverse audience, and by primarily restricting advertising and product exposure to some suburbs and ethnic groups, Zhao and his team have' stretched their potential market,' says Australian Business School business professor Paul Patterson. Currently, these companies portray that it is only for an Asian markets.' Zhao's obstacle is not overwhelming, but it must serve as an example to international brands entering in Australia (particularly with a powerful ethnic theme or product suite).
In this respect, Chatime isn't the only one. The industry leader in the Asian tea industry is Easy Way, but outlets have lately been launched by other companies like GingCha. (The rubbery tapioca ' beads' or' bubbles' also known as bubble tea can be recognized by the fruit and dairy-based beverages). Likewise, an Australian company going abroad might need to think carefully about their own plan of growth.
As mentioned in the above Chatime case study, experts believe that Zhao needed to fix three issues. These are connected to one another and stream into each other. Next, he must guarantee that the brand of Chatime blends in with the traditional local market. Then he must work on an innovative publicity campaign that will shift the views of customers about the company. Finally, franchisors need to be convinced to operate outside of Asian dominated suburbs.
An hour of talk about organic grapefruit tea reveals the entrepreneur from China is conscious of these three obstacles. His preference for weight monitoring explains the first question. Like, McDonald's launched the McAloo Tikki burger when it extended to India, adjusting to the preference of local people for the same-name flavoured potato patty treat, franchises must be willing to change their items to accommodate new audiences. Chatime has adopted skimmed and soy milk, allowing consumers to customize their preferred sugar content. I hope the conventional market is going to be quite engaged in this,' Zhao states.
Rod Young, franchise expert and DC Strategies managing director, agrees that this is a good first step. He argues that the downfall in Australia of sugar-heavy American companies like Cinnabon is due to their apparent threat of' giving us a cardiac arrest. "American food has more sugar content than the standards of an Australian palate," he states. Your teeth feel like they might fall out.' Young proposes speaking to your target consumers to tackle this issue. According to him 'Focus group might prove to be fruitful in understanding what the consumers expect of your products'
Though luxury tapioca milk tea is the smash hit of Chatime worldwide, fruit-based teas and milkshakes have better success in Australia than they would in Taiwan. It is because they want' fresher and healthier' items on the Australian market. Zhao has revamped Chatime's layout to build into this impression. The debut theme was a vivid, cartoonish violet, but now the interior spaces of the stores are pale green with bamboo features. Purple is not giving people a fresh impression,' he says. There are tea leaves on showcase to demonstrate the company's natural influence. Zhao intends to target the mature consumers, rendering the adolescents to the competitors, thus avoiding the "bubble tea" appellation and also desiring to declare Chatime the "tea experts."
We would like to concentrate on well-educated people that know the advantages of drinking tea. This is why we have a very mature and realistic branding and phrasing. We're trying to imply, ' Indeed, we're the experts, believe us, sip our tea, you're going to get healthier’
When a Chatime store launched at the QVB shopping plaza in Sydney, Zhao says free demos from the venue of the franchise brought the brand to a more mainstream audience. He is also focusing on a new promotional campaign that he believes would inform current and prospective franchise owners of the ability of the product to draw non-Asian consumers interest.' We would like to be like Boost Juice,' says Zhao.
In 2001, the 33-year-old entrepreneur first came as a student to Australia. He finished two master degrees and began to work in banking and finance to build up sufficient capital to support a master franchise deal. After a six-month awareness trip to meet potential investors in Taiwan at the end of 2008, he was fascinated by Chatime's head office's willingness to' become a version of Starbucks, but for tea.'
Yet Rod Young from DC Strategies has practical advice on such projects. I believe these niche markets create great potential and I'd advise every company to not be all things for all customers,' he says. Concentrating on a specific ethnic segment and increasing market penetration in those markets is not irrelevant.'
1. As per the Chatime case study, their strategic objective is to concentrate on Asian consumers
They did advertisements in the mandarin language that only communicated to their Chinese consumers. Even when they expanded their enterprise in Australia, they concentrated on trying to keep their retail outlets accessible to where the Chinese inhabited areas more. The primary objective as observed from the Chatime case study, was to penetrate the Asian-Australian market. Now, Zhao, the popular regional master business owner is looking for more stores to be launched. His goal is to achieve 50 outlets by the year's end, from the traditional Asian frontier inhabited by second-and first-generation immigrant households as well as students from abroad.
This form of approach is not successful as it addresses a particular set of consumers only. To drive sales from different cultures, it is necessary to understand the requirements of consumers or to examine their preferences and tastes. As McDonald's in India, they followed a practice of offering potato patty burgers because their Indian consumers were mostly vegetarian.
As per the Chatime case study the company will have less scope to diversify: it is a huge risk trying to follow the approach of targeting a specific section of the population that a business can not diversify because diversification motivates financial profit. Since an organisation gets the revenue from the business after obtaining and starting for a joint venture and with it also creates lending authority and cash flow (Sadgrove, 2016).
Focused market: if the firm's market is focused on just one specific type of customer then the commodity becomes a focused item and the company will get tough competition with its consumers. In contrast, the market penetration also declines. The user base often grows when reaching new clients (Cusumano, Kahl, & Suarez, 2015).
Consumers: if the company serves a certain section of the population then it is very clear that if the brand is marketed to other consumer groups then the product would be less desirable. Consumers might not tend to buy the commodity and their position is fulfilled by a premature assessment. If an item is aimed at a specific set of consumers then the organization fails to meet those consumers who might be interested in the product as well. Presume if a candy maker wants to target children for that brand then it may occur that both teens and adults will choose to have that candy, which means concentrating on the children for that candy may cause them to lose a considerable proportion of adult and adolescent consumers (Keller, 2016).
2. Chatime's competitive edge can be split into 3 sections:
Value: According to the Chatime case study, the company uses traditional tea and coffee appliances to deliver the best quality beverages in order to make the drink accessible to its user. Chatime utilizes the best-imported tea in their very own nations and the components are also strongly supportive minus the additives and preservatives. Chatime incorporates models and ideas from the Japanese tea manufacturers, as well as the Japanese idea of product quality (Lailla & Hananto, 2019).
Advancement: Chatime has a wide variety of teas and coffee, as well as a number of condiments and chocolate. They provide fruit tea collection, new teas, mousse , QQ jelly, 9 soothing juice and oriental bubble tea. They also use special flavors in addition to the array of teas to make their products. They have an item that has been their top seller called "White Pearl" . Such teas are produced from seaweed extract that has higher fiber and low calories and sugar (Hoffman, 2019). There are also many other teas that are quite creative, such as the red bean pearl's milk tea.
As per above Chatime case study, the company is dedicated to providing their consumers with organic fruit flavoured teas as their consumers were more keen on having nutritious food. Chatime not only offered nutritious items, but also focused on offering fresh items to their clients. The sale was fairly good to the above. Their products targeted at establishing that they are specialist in tea production motivate their buyers to keep a healthy lifestyle (Rahayu & Melinda, 2017).
3. Chatime's concerns or issues are:
- Make sure that the brand suits the local and mainstream markets
- Concentrate on innovative marketing campaigns that would shift the customer's perspective
- And to convince the franchise owner to establish outlets outside of the suburban areas where only Asians happen to be living.
Those three became Chatime's biggest growth strategy obstacle, but Chatime had rivals on the market in commercial terms. Rivals are often a difficulty for a business, so Chatime has its rivals like Gingcha and Easy Way's which are market leaders. Therefore, alongside Chatime, Ghingcha had also launched new outlets so there was a significant chance of competitiveness. There had been an absolute need to consider the need of non-Asian customers to this issue and the question of entry into the market. For any product announcement, the company will conduct a survey of consumer tastes and preferences and, with the aid of the research, the company will continue to market the product (Fröjdö, 2018). All Chatime grasped was that the Australians favoured balanced and sugarless beverages. People became weary of American products that contained high calories and also elevated levels of sugar that could cause people multiple health complications. Chatime originally introduced skimmed milk and soy milk having their nutrition-conscious consumers in consideration, and this shaped up to be a decent start for the organization (Ghaderi, 2016)
4. Chatime needs to concentrate on its internal resources in order to establish and achieve its objective. Service plays a vital role in this. Not only does a corporation prosper through its creative techniques, quality of products and promotional activities, but also through its superior service framework. Chatime has its own demand and collective of consumers with three popular distinguished products, but a strategic objective involves services to help them preserve their consumers. It can be achieved by building consumer loyalty, and staff must be effective in their support for the consumer with their quality service. Chatime has a professional research and marketing team with outstanding brand development practices and an inspection process of high performance (Sari, 2015).
The tea inspectors and the tea designers are skilled and the company is using elevated-quality technologies for their brand. Chatime needs to reinforce its customer relationships and get the products available to nearby places as well. In order to set their mind-set for having tea, Chatime must improve their customer satisfaction, their range of outlets and an environment for their consumers. It is important to take into account a store location and its setting. This is because a nice atmosphere helps the consumer spend a longer time in a store (Kusuma, Wahab, & Widad, 2015). A good atmosphere draws a greater group of consumers. To provide it, Chatime wanted a special colour to reflect the standard and services of their products In which a bright purple hue has been used for the debut, they wanted a good choice of colour for their outlets because it seemed that purple and green were not appropriate. Chatime case study are being prepared by our marketing assignment help experts from top universities which let us to provide you a reliable top assignment help service.
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